Mr Hammond said the attack was a "low point" in relations but the election of Hassan Rouhani as president has seen links improve "step by step".

The reopening ceremony, where the Union flag was raised to the sound of the national anthem, is an "important milestone in improved relations", according to Mr Hammond.

Plans to reopen the embassy were announced by the Government last year as relations between London and Tehran improved under president Rouhani and Iran's strategic position came under the international spotlight as the crisis sparked by Islamic State grew in neighbouring Iraq.

Last month Iran struck a deal after a decade of negotiations with world powers over its nuclear programme, with some sanctions being lifted in return for allowing inspections.

The easing of sanctions will open up significant international trade opportunities.